SEC, IBP tie up vs pyramiding schemes

The Securities and Exchange Commission (SEC) and the Integrated Bar of the Philippines (IBP) have agreed to work together to stop the proliferation of fraudulent investment solicitation activities such as pyramid schemes.

SEC Chairman Lilia R. Bautista said the IBP has agreed to provide free legal aid to overseas Filipino workers and retirees who wish to recover their placements from pseudo-investment entities or companies engaged in pyramiding activities.

As such, claims can only be made through the regular courts. The IBP, through its 38 branches nationwide, will assist the victims in the filing of said cases.

Under its free legal aid program, the IBP can provide legal counseling and representation for those who cannot afford to hire lawyers and who qualify as beneficiaries.

Welcoming the assistance of the IBP in going after investment scam operators, Bautista said the partnership will complement the work of the taskforce on prosecutors formed by the Department of Justice to speed up cases filed against pseudo-investment firms Multinational Investments Corp. (Multitel), Tibayan Group, and Mateo Management Group (MMG).

In its meeting with top SEC officials, the IBP noted that while there are existing laws to prevent the proliferation of pseudo-investment scams, the enforcement of these laws remains a problem.

The IBP further pointed out that legal remedies available under the present legal infrastructure are criminal prosecution and civil remedies such as class action, consolidation of pending cases and seizure of assets of erring companies and/or individuals.

Aside from the legal aid program, the IBP has also agreed to provide assistance in crafting laws against investment scams.

The SEC is pushing for the immediate passage of a law that would ban pyramid or get-rich-quick schemes to ensure the protection of the public.

Bautista blamed the lack of laws against pyramiding for the proliferation of deceptive and unfair sales acts and practices of chain distribution operations.

She said that although the SEC can file criminal cases against perpetrators of investment scams, the agency is helpless in preventing pyramiding operations.

A bill seeking to ban pyramid schemes is pending at the House. It seeks to amend the Consumer Act by amending the definition of "chain distribution plan or pyramid sales scheme", and clarifying activities and operations that would identify an entity as pyramiding operator.

The proposed measure also defines permissible sales practices of multiple level marketing operations and grants the Department of Trade and Industry and the SEC motu propio powers to cancel registrations of erring entities.